County apartment rents, demand described as flat

While home prices continue to fall, the cost of renting an apartment remains stable in San Diego County, according to a new survey by the research firm RealFacts Inc.

The average monthly cost of renting within complexes of 100 or more units increased less than 1 percent in the third quarter to $1,405, according to a RealFacts report that comes out today. The rental cost rose a little more than 3 percent from the third quarter of 2007.

The average third-quarter occupancy rate in the county was 95.8 percent, up slightly from the 95.5 percent of last quarter. Measured from the third quarter of 2007, occupancy was up 0.1 percent.

“Right now, everything is flat,” said Caroline Latham, chief executive officer of the Novato-based research company. “I would say rents are going to remain flat in the next quarter. There is absolutely no evidence from our data of anything happening” to change apartment demand.

In California, San Diego County ranked sixth among metro areas in monthly rental costs. The U.S. average rent for an apartment in September was $1,002, compared with $1,000 in June.

Latham said it doesn't appear that residents who are losing their homes through foreclosure in the San Diego region are moving in great numbers to the large apartment complexes she monitors.

“If you are used to living in a house, you may not want to live in a place with 123 other units,” Latham said. “Another reason is they may not want you. All of these complexes have a way of checking your credit. If you have gone through foreclosure, it is a big black mark.”

While some people who have gone into loan default have left the county, Latham said she believes that most have moved in with relatives.

“The family is the safety net,” she said.

In August, the county had 1,979 foreclosures, according to MDA DataQuick Information Systems. That marked a 1 percent decline from the previous month, but a jump of nearly 140 percent over August 2007.

So far, very few apartment complexes nationally have gone into foreclosure, despite the mortgage-market meltdown that has affected numerous homeowners. Latham said. She attributed that to strong occupancy and the overall stability of the rental market.

Alan Nevin, chief economist for the California Building Industry Association and San Diego-based MarketPointe Realty Advisors, noted that the RealFacts survey results were similar to those reported last month in a MarketPointe study.

MarketPointe found that apartment rates in the county were $1,344, up slightly from $1,312 six months earlier. The half-yearly study said the local vacancy rate had dropped to 2.25 percent from 3.63 percent. MarketPointe surveys complexes of 25 units or more.

In June, the San Diego County Apartment Association, which surveys rentals of all sizes, reported that the average rent locally was $1,201, an increase of nearly 3 percent over the association's fall 2007 survey. It also found a 4.8 percent vacancy rate countywide, an increase from the 3.4 percent reported in its fall survey.